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No lesson learned

No lesson learned

There has not been business as usual after the government levied heavy taxes on the real estate sector in the federal budget to fill its coffers. Whiz kids in the finance ministry adopt novel ways in every budget to enhance revenue collections, but every attempt falls flat in the midway. In its earlier budget, the government slapped 0.6 percent withholding tax on banking transactions which squeezed the business in the entire industry. In the current budget, the government imposed withholding tax on the real estate sector bringing the property business to a grinding halt. The government could not collect the projected revenues and according to the stakeholders the collections will further decline in the coming months. According to the chief of a real estate association, the tax collections from the sector could increase up to 600 percent if the government accepts the demands of the realtors. As the businesses grow, the government revenues also grow but the policymakers sitting in their offices tend to kill the hen to get the golden eggs once and for all. It is easy to impose taxes by issuing royal decrees, but it is difficult to repair the damages in the aftermath. The imposition of heavy taxes and other steps, as declaration of the source of income, have only brought slump in the real estate sector as the investors have lost their interest in the business. They are looking opportunities in other countries of the world and the government will not be able to stop the capital flight.

According to experts, hundreds of industries depend on the construction sector, but only one wrong step has spoiled everything in the country. Pakistani business has its own dynamics and it is different from many other countries. It is not plausible to apply foreign experiences on the local industry as the change itself is a process and not an endgame. It takes time to create conditions for the application of any foreign experiences in the country where documentation of economy is still a problem. The new steps has ditched the housing schemes which were launched with fervor, but no longer remained viable. The investment by the overseas Pakistanis has slowed down as the tough laws open the floodgates of corruption.

It will be in the interest of the nation and the economy to revert the decision made in the federal budget and process of taxation should be started in consultation with the stakeholders. The population of the country is increasing and they need more housing schemes and other facilities. A brake in the real estate activities means slowing down of the construction industry and other businesses related to it.